Wyke Farms insists price cut must stay

Farmhouse cheesemaker Wyke Farms has told its contracted farmers that it has no option but to impose a further 1.3p/litre price cut from 1 April to stay competitive.

About 70 producers descended on the company’s head office at Wyke Champflower, Somerset on Tuesday (31 March) demanding a justification from managing director Richard Clothier as to why prices were falling again.

The cut announced last Friday (27 March) followed reductions of 1.5p/litre in February and 0.7p/litre in January and means most suppliers are now receiving around 24p/litre.

But Mr Clothier said that, while the company’s top-branded cheese was still selling well, it was the peripheral commodities like surplus fat, off-cuts, lactose and protein that were suffering. “The whey return has dropped considerably.”

Overall, Wyke Farms had seen the equivalent of 4p/litre removed from its revenue since the market peak in late 2007, he later told Farmers Weekly. Despite this, it had achieved one of the highest rolling 12-month average prices and was still in the top third of the league table.

As a small concession, Wyke Farms did agree to extend the deadline for farmers to give notice to terminate their contracts to the end of April. But even if they choose to do so, they will still be tied in to a 12 month notice period.

Wyke Farms supplier Ian Meeker told Farmers Weekly after the meeting that it remained to be seen how many producers would avail of this option. “There are other buyers in the area – Barbers, Wiseman and Meadow Foods, for example. But I don’t know if they are recruiting.”

He said there was still a lot of anger among milk producers and urged Wyke Farms to pass on any future upturn in the market as soon as it comes. “We are not out to cause trouble,” he insisted. “We value selling our milk to Wyke Farms and want them to succeed. But we also want a price that covers our cost of production.”

Several farmers at the meeting had pointed to the latest “cost tracker” produced by Promar in relation to the Tesco price. This put the estimated cost of production at 26.93p/litre, suggesting many farmers supplying cheesemakers may now be losing money.

But Mr Clothier said that this had little relevance to what return his business was able to get from the market place. “It would be nice if the whole dairy sector operated on a Promar cost tracker basis,” he said. “But the reality is that only one retailer, buying just 2% of the milk, uses this system.”